Your Directors have pleasure in presenting the 18thAnnual Report and the AuditedFinancial Statements for the Financial Year ended March 312017.
The performance of the Company for the Financial Year ended March 312017 is as under:
|PARTICULARS ||31-Mar-17 ||31-Mar-16 |
|Total Revenue ||128631.23 ||168206.99 |
|Profit/ (Loss) || || |
|before finance cost depreciation and tax expense ||(2776.23) ||16294.68 |
|Finance cost ||15744.23 ||12272.78 |
|Profit / (Loss) before depreciation and tax expense ||(12968.00) ||4021.90 |
|Depreciation ||2731.50 ||2654.44 |
|Profit/(Loss) before tax expense ||(15699.50) ||1367.46 |
|Tax expense || || |
|i. Tax expense of prior years ||23.49 ||- |
|ii. Deferred Tax ||(9.88) ||628.39 |
|Net Profit/(Loss) for the year ||(15713.11) ||739.07 |
State of the Company's Affairs :
During the year under review the total revenue of the company was Rs. 1286.31 croresas against previous figure Rs.1682.07 crores which is 23.53 % less than the last year andLoss before depreciation and taxes recorded at (Rs.129.68) crores as against net profit ofRs. 40.21 crores in the previous year.
The manufacturing sales (including power sales) were Rs.664.11 Crores in the currentyear compared to Rs.817.18 Crores in the previous year. The trading sales during the yearamounted to Rs. 674.74 Crores compared to Rs. 922.11Croresin the previous year.
The decrease in revenues was due to the lower production levels in the steel segmentdue to liquidity constraints. Power sales were also substantially less in the current yeardue to lower price and non off-take of power by the state utilities despite agreementexisting for supply of power.
SEIL S4A Scheme:
The concerns of liquidity issues were discussed with lenders for a suitable debtresolution. The Lenders in their various Joint Lender's Forum ("JLF") meetingsdeliberated on the various options and agreed the recommendation for invoking the S4AScheme introduced by the Reserve Bank of India ("RBI") for the Company with theReference Date (DOR) as 28.12.2016. The Scheme was ratified by the Overseeing Committee(OC) appointed by RBI as communicated by the Lenders. As per the terms of S4A out of thetotal debt of Rs.977.04 crores Rs.508.06 crores would be treated as sustainable debt(Part A) to be serviced as per the existing terms and the balance Part B of maximum of Rs.468.98 crores will be converted into OCDs. Pursuant to the implementation of the S4AScheme Promoters have volunteered to transfer the alreadypledged equityshares infavourofLenders to the tune of 11834715 shares of Rs. 10/- each to comply with the scheme andthe promoters will also transfer an additional maximum 5971637 of equity shares infavour of the Lenders as per the agreement with the Lenders. Though the conversion of debtinto equity was available in the S4A schemeof RBI the Promoters volunteered and agreed todilute their stakes alone as mentioned above in the interest of the Company and the otherstake holders as a whole. The number of OCDs issued will be reduced to the extent ofequity shares acquired by the Lenders. The Lenders will be also issued OCDs upto a maximumamount of Rs.52.28 crores against the interest on Part B of the debt for from the DOR tothe date of implementation.
Listing of Equity Shares
The Company's Equity shares are listed at the Bombay Stock Exchange Limited (BSE)PhirozeJeeJeebhoy Towers Dalal Street Mumbai-400 001 having nationwide trading terminalsand on Calcutta Stock Exchange Limited (CSE).
The Company has paid the Annual Listing Fees to the said Stock Exchanges for thefinancial year 2017-18.
Listing on National Stock Exchange of India Limited (NSE):
The Company has made an application for listing of equity shares on National StockExchange of India Limited (NSE) during the year and obtained the approval from NSE. Theexisting 75984812 Equity Shares of the Company are admitted to list on National StockExchange of India Limited (NSE) with effect from 20.07.2017 under the Symbol"STEELXIND".
Delisting from Calcutta Stock Exchange Limited (CSE)
The Company made an application for voluntary delisting of equity shares from CalcuttaStock Exchange Limited (CSE) during the year. However in the process suspension of equityshares on CSE got to be revoked. Since the status is active now it was proposed to make afresh application for voluntary delisting as per the applicable regulations.
Unclaimed Suspense Account:
There was no Unclaimed Suspense account as on 31.03.2017 however SEIL -UnclaimedSuspense Account was created and 433982 equity shares held by 135405 shareholders inphysical mode have been transferred to SEIL - Unclaimed Suspense Account as on the date ofthis report.
Subsidiaries Joint Ventures or Associate Companies
Your company incorporated a company in Hong Kong which continues to be in dormantstate due to non-commencement of business operations since its incorporation. Your companydoes not have any Joint Ventures or associate companies.
Number of Meetings of the Board of Directors
During the year ended March 312017 Seven Board Meetings were held.
The dates on which the Board meetings were held are May 282016 August 13 2016August 312016 September 30 2016 November 12 2016 February 12017 and February 142017.
Details of number of Meetings attended by each Director have been given in thecorporate governance report which forms part of the Annual Report.
Director's Responsibility Statement as required under Section 134 of the Companies Act2013
Pursuant to the requirement under Section 134 of the Companies Act 2013 with respectto the Directors' Responsibility Statement the Board of Directors of the Company herebyconfirms:
i) that in the preparation of the Annual Accounts the applicable accounting standardshave been followed;
ii) that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 312017 andof Profit and Loss Account of the Company for that period;
iii) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
iv) that the Directors have prepared the Annual Accounts for the Financial Year endedMarch 312017 on a going concern basis;
v) that the Directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and
vi) That the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
Statement on Declaration given by Independent Directors under Sub-Section (6) ofSection 149
The independent directors have submitted the declaration of independence as requiredpursuant to section 149(7) of the Companies Act 2013 stating that they meet the criteriaof independence as provided in sub-section(6).
Particulars of Loans Guarantees or Investments under Section 186
Pursuant to Section 186 of the Companies Act 2013 and Schedule V of the Securities andExchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations 2015 ("ListingRegulations") the Company neither has directly nor indirectly given any loan to itsDirectors nor extended any guarantee or provide any security in connection with any loantaken by them. Further the Company has neither given any inter-corporate loan / advancenor made any investments in other companies during the financial year 2016-17.
Particulars of Contracts or Arrangements with Related Parties Referred to inSub-Section (1) of Section 188
The particulars of contracts or arrangements with related parties referred to insub-section (1) of Section 188 are prepared in Form No. AOC-2 pursuant to clause (h) ofsub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules2014 and the same is enclosed as Annexure - 1to this Report.
Transfer of Amount to Reserves
The Company doesn't propose to transfer any amount to the general reserve for theFinancial Year ended 31st March 2017.
The Board of Directors of the Company could not recommend Dividend for the financialyear ended March 312017. Share Capital
During the period under review there was a structural change in the Authorized ShareCapital as mentioned bellow:
The Authorized Share Capital of the Company is Rs. 332 0000000/- (Rupees threehundred and thirty two crores only) divided into 258000000 (Twenty Five crores EightyLakhs only) equity shares of Rs.10/- (Ten only) each and 74000000* (Seven Crore FortyLakhs only) preference shares of Rs. 10/- (Ten only) each.
During the year *the redeemable Preference shares 1000000 of Rs. 10/- each andRedeemable Cumulative Optionally Convertible preference shares 73000000 of Rs. 10/-each were restructured as 74000000* (Seven Crore Forty Lakhs only) preference shares ofRs. 10/- (Ten only) each as mentioned above.
And During the year there is no change in Paid up Share Capital of the Company.
The Company has not issued any shares with differential rights and hence no informationas per the provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies(Share Capital and Debenture) Rules 2014 is furnished.
The Company has not accepted any deposits from the public and as such no amount onaccount of principal or interest on deposits from public was outstanding as on the date ofthe balance sheet in terms of Section 73 of the Companies Act 2013.
Extracts of Annual Return
The Extracts of Annual Return is prepared in Form MGT-9 as per the provisions of theCompanies Act 2013 and Rule 12 of Companies (Management and Administration) Rules 2014and the same is enclosed as Annexure - 2 to this Report.
The conservation of energy technology absorption foreign exchange earnings and outgopursuant to provisions of Section 134(3)(m) of the Companies Act 2013 (Act) read with theCompanies (Accounts) Rules 2014
Information with respect to conservation of energy technology absorption foreignexchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Companies(Accounts) Rules 2014 is prepared and the same is enclosed as Annexure - 3 to thisReport.
The Board of Directors has formed a risk management committee to identify evaluatemitigate and monitor the risk associated with the business carried by the company. Thecommittee reviews the risk management plan and ensures its effectiveness. A mechanism hasbeen put in place which will be reviewed on regular intervals.
Corporate Social Responsibility
Corporate Social Responsibility is commitment of the Company to improve the quality oflife of the workforce and their families and also the community and society at large. TheCompany believes in undertaking business in such a way that it leads to overalldevelopment of all stakeholders and Society. Company has been pursuing CSR activities longbefore they were made mandatory under the Companies Act 2013. A report on CorporateSocial Responsibility (CSR) Policy and Activities as per Rule 8 of the Companies(Corporate Social Responsibility Policy) Rules 2014 is appended with this report asAnnexure - 4.
Sub Committees of the Board
The Board has Audit Committee Nomination and Remuneration Committee Stakeholders'Relationship CommitteeandCorporate Social Responsibility Committee. The composition andother details of these committees have been given in the Report on the CorporateGovernance forming part of the Annual Report.
A separate report on Corporate Governance is annexed as part of the Annual Report alongwith the Auditor's Certificate on its compliance.
Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review as stipulatedunder Listing Regulations is annexed herewith which forms part of this report.
Whistle Blower Policy and Mechanism
The Board of Directors has adopted Whistle Blower Policy. The Whistle Blower Policyaims for conducting the affairs in a fair and transparent manner by adopting higheststandards of professionalism honesty integrity and ethical behavior. All permanentemployees of the Company are covered under the Whistle Blower Policy.
A mechanism has been established for employees to report concerns about unethicalbehavior actual or suspected fraud or violation of Code of Conduct and Ethics. It alsoprovides for adequate safeguards against the victimization of employees who avail of themechanism and allows direct access to the Chairperson of the audit committee inexceptional cases.
The Board of Directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the Act and thecorporate governance requirements as prescribed by SEBI (Listing Obligations andDisclosure Requirement) Regulations 2015. The performance of the Board was evaluated bythe board after seeking inputs from all the directors on the basis of the criteria such asthe board composition and structure effectiveness of the board processes in formationand functioning etc. In a separate meeting of independent directors performance ofnon-independent directors performance of the Board as a whole and performance of theChairman was evaluated taking into account the views of executive directors andnon-executive directors. The same was discussed in the board meeting that followed themeeting off the independent directors at which the performance of the board itscommittees and individual directors was also discussed. Performance evaluation ofindependent directors was done by the entire board excluding the independent directorbeing evaluated.
Mr. Bavineni Suresh and Mr. VeeramachaneniVenkata Krishna Rao Directors of the Companyretire by rotation and being eligible offer themselves for re-appointment.
Details of Directors or Key Managerial Personnel Who were appointed or have resignedduring the Year
Mr. B. Suresh Kumar (DIN:00206473) was reappointed as Joint Managing Director of theCompany for a further period of three years with effect from 27th October 2016 pursuantto the provisions of Sections 196 197 and 203 read with Schedule V and all otherapplicable provisions of the Companies Act 2013 and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.
Mr.Lincoln Babu Are was appointed as Whole time Company Secretary of the company w.e.f.02nd May 2016 pursuant to the provision of Section 2013 and all other applicableprovisions of the Companies Act 2013.
Policy on directors' appointment and remuneration
A gist of policy of the Company on directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters as required under sub-section (3) of Section 178 of the Companies Act2013 is available in the Corporate Governance Report.
The company's policy on directors' appointment and remuneration and other mattersprovided in Section 178 (3) of the Act have been disclosed in the corporate governancereport. Under Section 178 (3) of the Companies Act 2013 the Nomination and RemunerationCommittee of the board has adopted a policy for nomination remuneration and other relatedmatters for directors and senior management personnel. A gist of the policy is availablein the Corporate Governance Report.
At the Annual General Meeting held on December 31st 2014 M/s. Pavuluri& CoChartered Accountants (Firm Registration
No. 012194S) Hyderabad were appointed as Statutory Auditors of the Company to holdoffice for a period of Five years i.e. till the conclusion of the Annual General Meetingto be held in the calendar year 2019.
In terms of the first proviso to Section 139 of the Companies Act 2013 theappointment of the auditors shall be placed for ratification at every Annual GeneralMeeting. Accordingly the said appointment of M/s. Pavuluri& Co Chartered Accountants(Firm Registration No. 012194S) Hyderabad as statutory auditors of the Company is placedfor ratification by the Shareholders.
As required under section 139 of the Companies Act 2013 the Company has obtainedwritten consent from M/s. Pavuluri& Co Chartered Accountants (Firm Registration No.012194S) Hyderabad to such appointment and also a certificate from the auditors to theeffect that if their appointment is ratified it would be in accordance with theprovisions of Section 139(1) of the Act and the rules made there under.
The Board of Directors and the Committee thereof recommended the appointment and theresolution forms part of the agenda at the ensuing Annual General Meeting.The Auditorshave confirmed that they hold a valid certificate issued by the Peer Review Board of theInstitute of Chartered Accountants of India.
The Statutory Auditor's Report does not contain any qualifications reservation butadverse remarks with regard to dues of the service tax duty of customs duty of excisevalue added tax central sales tax Cess and any other statutory dues which have not beendeposited with appropriate authorities on account of any dispute.
The Board clarifies that as Company facing liquidity issues due to Lower margins insteel non-off take of surplus power. This has resulted in a gap of cash flow timingshence there have been delays payment of statutory dues. However the Company is takingnecessary steps to avoid such delays.
This report forms part of the Annual Report.
The Products classified as "Steel and Electricity" manufactured by theCompany are subject to Cost Audit in terms of Sec. 148 of the Companies Act 2013 readwith the rules issued there under by the Central Government.
Accordingly M/s.DZR& Co. Cost Accountants have been re-appointed as the CostAuditors for the year ending 31st March 2018.
The Cost Audit Report for year ended 31st March 2016 was reviewed by the AuditCommittee at its meeting held on August 312016 and has been filed on October 28 2016.
The Board of Directors of the Company has appointed M/s. Bhavani& Co CharteredAccountants to conduct Internal Audit of the Company for the Financial Year ended 31stMarch 2017.
Secretarial Auditor's Report
As per the provisions of Section 204 of the Companies Act 2013 the Board of Directorshave appointed BSS &AssociatesCompany Secretaries as Secretarial Auditors to conductSecretarial audit of the company for the Financial year ended on March 312017.
Secretarial Audit Report issued by Mr. S.Srikanth Partner of M/s BSS & AssociatesCompany Secretaries in form MR-3 is enclosed as Annexure - 5 to this Annual Report.
Particulars of employees
The ratio of remuneration of each director to the median of employees' remuneration asper Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part of theBoard's report.
A statement containing the names of every employee posted throughout the financial yearand in receipt of a remuneration of Rs.60 lakh or more or posted for part of the year andin receipt of Rs.5 lakh or more a month under Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of the Board's reportenclosed as Annexure - 6.
All properties and insurable interests of the Company including building plant andmachinery and stocks have been fully insured.
Details in respect of adequacy of internal financial controls with reference to theFinancial Statements
1. The Company has set internal control systems to maintain accurate and completeaccounting records to safeguard its assets to prevent and detect any frauds and errors.
2. The Company has appointed Internal Auditors to observe the Internal Controls andwhether the work flows of organization are being done through the approved policies of theCompany. In every Quarter during the approval of Financial Statements Internal Auditorswill present the Internal Audit Report and Management Comments on the Internal Auditobservations; and
Change in the nature of business
There is no change in the nature of business of the Company.
The details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future
Material changes and commitments
There are no Material changes and commitments in the business operations of the Companyfrom the financial year ended 31stMarch 2017 to the date of signing of the Director'sReport.
Policy on Sexual Harassment
The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplacein accordance with The Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013.
During the financial year ended 31st March 2017 the Company has not received anyComplaints pertaining to Sexual Harassment.
Industrial Relations and Human Resources
Your company believes that its employees are one of the most valuable assets of theCompany and the Board appreciates the employees across the cadres for their dedicatedservice to the company and expects their continuous support and higher level ofproductivity for achieving the targets set for the company. During the year under reviewthe company organized various training programmes at all levels to enhance skills ofemployees. The total strength of employees is about 1675 as on 31st March 2017.
The Directors take this opportunity to place on record their sincere thanks to theBanks and Financial Institutions Insurance Companies Central and State GovernmentDepartments and the shareholders for their support and co-operation extended to theCompany from time to time. Directors are pleased to record their appreciation of thededicated services of the employees and workmen at all levels.
| ||On behalf of the Board of Directors |
| ||for STEEL EXCHANGE INDIA LIMITED |
|Place: Visakhapatnam ||B. SATISH KUMAR |
|Date: 16.08.2017 ||Chairman and Managing Director |
| ||(DIN:00163676) |